At least half of rural counties gained nonemployer establishments after adjusting for population change. Counties in the deep South gained while counties in the Northeast and West lost such jobs. A possible explanation could be that as the number of “traditional” jobs falls, the gig economy increases to compensate.

‘Gig Economy’: While U.S. Gains, Rural Shows Net Loss

One national study finds that the proportion of “alternative work arrangements” like freelancing and self-employment is on the rise. But by one measurement, rural America’s gig economy declined over a similar period. What’s going on?

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EDITOR’S NOTE: The nature of work in the U.S. may be changing from traditional employment to the “gig economy” – where people are self-employed, work as contracted labor, hire out through a temp agency, or freelance. A new study from researchers at Princeton and Harvard found that the percentage of workers engaged in such “alternative work arrangements” grew 10 points over the past decade.

We wondered how (and whether) this trend is playing out in rural America. So we asked Roberto Gallardo, Ph.D., to take a look. Gallardo is a frequent contributor to the Daily Yonder, where he’s had numerous articles on rural connectivity, economics, and demographics. He is an associate extension professor and leader of the Mississippi State University Extension Intelligent Community Institute.

Gallardo’s investigation of the rural gig economy will run in three parts, starting today. Look for the next instalment next week.

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The gig economy has been around for a long time, but it’s getting new attention, especially during the presidential campaign season. One reason is that the gig economy has received a steroid shot thanks to technology.

Because of digital advancements, the “traditional” gig economy of contract workers, temps, freelancers, and other self-employed workers has converged with the sharing economy. The sharing economy includes “services and goods that employ under-utilized assets via online marketplaces or decentralized networks for both monetary and non-monetary benefits,” according to the American Action Forum. For example, if you help edit articles on Wikipedia or have used your computer to help astronomers find planets outside our solar system, you’ve participated in the sharing economy.

From this convergence has come the “online” gig economy. This is what you will hear politicians talk about (and the one we refer to from now on as simply the gig economy). It includes services like Uber, Lyft, and Airbnb, among others.

A recent research study by Princeton University found that alternative work arrangements in the U.S. increased significantly between 2005 and 2015. Those hired out through contract companies showed the highest increase during the same period.

What about rural communities? How is their gig economy doing?

To answer these questions, we used a national county-level dataset as a proxy of the gig economy. The U.S. Census compiles data on “nonemployer” establishments – defined as a single physical location where business is conducted or where services or industrial operations are performed. These nonemployer establishments had no employees but paid federal taxes. Using nonemployer establishments as a proxy for the gig economy isn’t a perfect solution. It probably omits temp workers and some self-employed workers. But it’s a good place to start our investigation, because it tells us something about the relative number of rural people who are working for themselves.

As shown in the table below, nonemployers increased 23.4 percent in the nation between 2003 and 2013. This finding is similar to the Princeton study.

However, all this growth occurred in metropolitan counties. Small city and rural counties actually lost nonemployer establishments, declining by 2.2 and 0.5 percent respectively during this period.

Table 1. Change in nonemployer establishments by county type

2003

2013

# Change

Percent Ch.

U.S.

18,649,114

23,005,592

4,356,478

23.4

Metropolitan

15,570,044

19,971,962

4,401,918

28.3

Small City

1,776,132

1,737,608

-38,524

-2.2

Rural

1,302,938

1,296,022

-6,916

-0.5

The map at the top of this article shows the percentage change in nonemployer establishments in both small city and rural counties.

As we would expect, the majority of nonemployer establishments were in metropolitan counties in 2003 and 2013 as shown in the graph below. After all, there are more people in metropolitan counties than nonmetropolitan ones. Between 2003 and 2013, the share of nonemployers located in metropolitan counties increased from 83.5 percent in 2003 to 86.8 percent in 2013. The small city and rural shares declined during this period.

Figure 1. Percent share of nonemployers by county type.

We all know metropolitan counties have a higher population density. So, after accounting for population size, the chart below shows the number of nonemployer establishments per 1,000 residents by county type.

In this chart we see the rural gig economy in a slight decline. Back in 2003, rural counties and counties with small cities actually had more nonemployer establishments per 1,000 residents than metropolitan counties. But nonemployer establishments per 1,000 residents grew in metropolitan areas by 2013, surpassing—not by much—the rate for rural areas and counties with small cities.

Figure 2. Nonemployer establishments per 1,000 residents by county type.

What’s going on?

Remember that in 2003 the data was probably measuring the traditional gig economy. By 2013 however, the online gig economy was gaining steam.

Perhaps one reason the number of nonemployer establishments per 1,000 residents fell is lack of adequate broadband infrastructure in rural areas. Another reason may be that rural counties are lagging their urban counterparts in joining the online gig economy because they may not be aware of its benefits.

Whatever the reasons, the data is clear: Even though the numbers have declined, rural counties are engaged in the gig economy.

The next question is which industries in rural counties are thriving in the gig economy and which are having a hard time. We’ll look at the answer in part 2 of this series next week.

Roberto Gallardo, Ph.D., is the leader of the Mississippi State University Extension Service Intelligent Community Institute. The institute helps rural communities transition to, plan for, and prosper in the digital age. Gallardo is also a senior fellow at the Center for Rural Strategies, which publishes the Daily Yonder.